Definition
Proprietary trading firms, commonly known as “prop firms”, are financial institutions that trade their own capital, in contrast to other financial institutions that trade on behalf of clients. Prop firms build a team of highly profitable traders that will be trading the company’s capital with the aim of diversifying risk through different trading strategies implemented by different traders in the team.
Benefits
This model results in a mutually beneficial relationship between the firm and the traders. The firm gets to have professional traders to grow their capital while the traders get access to larger capital that they trade and earn a performance-based compensation from.
Traditional vs Modern Prop Firms
Prop firms used to have a very high barrier of entry for traders as most firms have high standards in recruiting traders (educational background, track record, and expensive “buy-in”s). But with the recent rise of talent pool in the retail trading industry, modern prop firms are now lowering the barrier of entry for retail traders to have access to prop firm capital.
Traditional:
High educational background usually required
Years of track record usually required
Extensive training period and program
Expensive buy-in capital for the prop firm to match
Modern:
Not focused on educational background
2-phase/1-phase evaluation process
Only cost to is the evaluation fee as low as $45
Opportunity for you and us
Modern prop firms have made it easier for retail traders to advance their trading careers by having access to significant capital, outstanding support and trainers, and scaling plans. It’s never been a more exciting time to pursue full-time trading.
Most programs are designed for profitable retail traders that showcase exceptional risk management. If you fall under this category, we welcome you to the world of prop firms here at Funding Traders.